Tuesday, March 11, 2014Last Update: 7:42 AM PT

Marijuana Pipe Makers Won't Chill Out

LOS ANGELES (CN) - A Minneapolis businessman breached an agreement to sell the trade name for a ceramic smoking pipe called Hive even after he received a $50,000 check in the mail, the prospective buyer claims in court. Vape Holdings sued Stone Arch Studio and its owner Wael "Wally" Sakallah in Federal Court, alleging breach of contract, promissory estoppel and slander of title. Sakallah and Stone Arch agreed to sell the Hive trade name to the Woodland Hills holding company this year before backtracking when they learned of Vape's value, according to the lawsuit. By that time, Vape says, it had already invested in its own line of marijuana vaporizers using the Hive mark. "Plaintiff Vape is forced to bring this lawsuit because Stone Arch, and its principal, Sakallah, suffer from 'seller's remorse,'" the 14-page complaint states. "This remorse comes after Sakallah later learned that Vape is a publicly traded company, and an up and coming leader in the legal cannabis industry, which plans to produce high-intensity, vaporization element systems ('H.I.V.E.'), a ceramic vaporization piece. That is, Stone Arch and Sakallah seek to extort more money from Vape than the previously agreed on sales price based on their post-sale inquiries regarding Vape's financial position." Vape says it has been negotiating with Sakallah since December 2013. After several offers and counteroffers, Vape says, Sakallah agreed in January to sell the marks for $50,000. At a trade show, according to the lawsuit, Sakallah told Vape's president that he was in the process of removing the Hive trademark from Stone Arch's pipes and asked when he could expect payment. Vape says it sent Sakallah a check, which he returned. After it sent the businessman the necessary U.S. Patent and Trademark Office documentation to assign the trademark, he refused to send it back, the complaint states. "Worse, defendants Stone Arch and Sakallah have been defaming Vape in the marketplace and falsely claiming that they are the rightful owner of the Hive trademark and trade name," the complaint states. Vape wants the court to enjoin Stone Arch from using the Hive trademark, and $1 million in damages. Colorado and Washington have legalized recreational pot. Oregon and Alaska may follow suit if the issue is placed on the ballot this November. Twenty states allow medical marijuana. Vape Holdings is represented by John Armstrong with Horwitz + Armstrong of Lake Forest.